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Problem 19-4A (Part Level Submission) The Hillside Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a...

Problem 19-4A (Part Level Submission) The Hillside Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Phil Weld, the manager of Hillside, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows.

Percent of
Total Sales
Contribution
Margin Ratio
Appetizers 10 % 70 %
Main entrees 50 % 25 %
Desserts 15 % 60 %
Beverages 25 % 80 %

Phil is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $154,000. The company has fixed costs of $1,303,900 per year.
(a)
Your answer is correct.
   
Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.)

Total restaurant sales $

Sales from Each Product
Appetizers $
Main entrees $
Desserts $
Beverages $

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(b)

Your answer is incorrect.  Try again.
   

Phil believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $585,000. At the same time, he is proposing to change the sales mix to the following.


Percent of
Total Sales
Contribution
Margin Ratio
Appetizers 25 % 70 %
Main entrees 25 % 10 %
Desserts 10 % 60 %
Beverages 40 % 80 %


Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income.(Round intermediate calculations to 3 decimal places e.g. 10.251 and final answers to 0 decimal places, e.g. 2,510.)


Total restaurant sales $


Sales from Each Product
Appetizers $
Main entrees $
Desserts $
Beverages $



Top Answer

Calculation Of variable cost % of each item which is 100-contribution margin Percent of Contribution Variable cost % V Sales... View the full answer

3 comments
  • I only need the second part answered. I had to copy the entire thing though.
    • B200896
    • Jul 19, 2016 at 9:38pm
  • It's (b)
    • B200896
    • Jul 19, 2016 at 9:38pm
  • Let the total sales be �x�. Thus, x*10%*70% + x*50%*10% + x*15%*70% + x*25%*80% - 1241900 � 585000 = 158900 x = 4672471 Total Sales = $4,672,471 Appetizer = $467,247 Main entrees = $2,336,236 Desserts = $700,871 Beverages = $1,168,118
    • Marion394
    • Jul 19, 2016 at 9:43pm

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Hello student, I can handle your question though it requires a lot of work for you to get the... View the full answer

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